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SSRN Electronic Journal
Article . 2024 . Peer-reviewed
Data sources: Crossref
https://doi.org/10.2139/ssrn.4...
Article . 2024 . Peer-reviewed
Data sources: Crossref
https://dx.doi.org/10.48550/ar...
Article . 2024
License: arXiv Non-Exclusive Distribution
Data sources: Datacite
DBLP
Preprint . 2024
Data sources: DBLP
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Credit Scores: Performance and Equity

Authors: Stefania Albanesi; Domonkos F. Vamossy;

Credit Scores: Performance and Equity

Abstract

Credit scores are critical for allocating consumer debt in the United States, yet little evidence is available on their performance. We benchmark a widely used credit score against a machine learning model of consumer default and find significant misclassification of borrowers, especially those with low scores. Our model improves predictive accuracy for young, low-income, and minority groups due to its superior performance with low quality data, resulting in a gain in standing for these populations. Our findings suggest that improving credit scoring performance could lead to more equitable access to credit.

Related Organizations
Keywords

FOS: Economics and business, FOS: Computer and information sciences, Computer Science - Machine Learning, Quantitative Finance - Computational Finance, General Economics (econ.GN), Risk Management (q-fin.RM), Computational Finance (q-fin.CP), Quantitative Finance - Risk Management, Economics - General Economics, Machine Learning (cs.LG)

  • BIP!
    Impact byBIP!
    selected citations
    These citations are derived from selected sources.
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    1
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Average
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
1
Average
Average
Average
Green